Will Inflation Make My Social Security Benefit Worth More?

Q. I will have reached full Social Security age in 2020. I have waited until age 70 to start benefits because of the 8% benefit increase in the intervening four years. But if the cost of living (COLA) increase turns out to be 10 to 11% by 2023, as has been suggested, should I start benefits this year? I will be 68 in early December. Does a person have to be in Social Security for a full year to qualify for the COLA?

— Retired and waiting

A. This is a good question.

Inflation has affected the prices of just about everything, and it will impact Social Security benefits as well.

You don’t have to start collecting your Social Security benefits to get the expected big COLA, said Darren Zagarola, a certified financial planner and certified public accountant at EKS Associates in Princeton.

“Social Security income is based on your 35 highest income years, and those earnings are indexed to the change in average wages since the year they were received,” he said. “So you still benefit from the higher COLA whether you file for benefits in December or not.”

You’re right that if you delay collection from age 68 to age 70, your benefit is guaranteed to continue to rise at 8% per year, Zagarola said. That is an increase of 16%. Whether you should collect or wait until age 70 is personal and will depend on your health and cash needs.

“COLA is usually announced in October and in December the messages go out to those receiving Social Security,” he said.

You can find the information online in the message center of your “My Social Security” account at www.ssa.gov.

Mail your questions to [email protected].

Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly e-newsletter.

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